Financing a Property Mortgage Interest Development

Mortgage Interest Development

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Source: Credit Suisse, Datastream. Last data point: 09.10.2017

Fix Mortgages with a Long Term Likely to Rise Slightly

The Swiss economy has been growing at a modest rate so far this year. For 2017 as a whole, we expect growth of a mere 1.0%. The recently published economic indicators point to an acceleration in growth in 2018. Downside risks nevertheless persist, with growth heavily dependent on the direction of the Swiss franc and the European economic situation. The rate of inflation has recently risen back above zero, although at an expected 0.5% for 2017 it remains at a low level. The Swiss National Bank (SNB) can therefore continue putting the development of the Swiss franc at the forefront of its monetary policy. The SNB is likely to leave its target band for key interest rates unchanged at between –1.25% and –0.25% over the coming 12 months. We therefore expect interest rates for Flex rollover mortgages to remain at their current lows over the next 12 months. A sideways movement is likewise anticipated in the case of Fix mortgages with a short and medium term. On the other hand, interest rates for Fix mortgages with a long term are likely to rise slightly, by 30 to 35 basis points, over the coming 12 months. As in recent weeks, however, upward and downward spikes must once again be expected for all maturities.

  Interest rate
Forecasts for
  09.10.2017 3 mths 6 mths 12 mths
Flex rollover mortgage1
1.00% 1.00% 1.00% 1.00%
Fix mortgage (3 years)2
1.13% 1.15% 1.15% 1.15%
Fix mortgage (5 years)2
1.23% 1.25% 1.30% 1.30%
Fix mortgage (10 years)2
1.62% 1.70% 1.80% 1.95%
Fix mortgage (15 years)2
2.05% 2.15% 2.20% 2.40%

The interest rates listed are indicative values and apply to top-quality residential property and borrowers with impeccable creditworthiness.

1 Flex rollover mortgage (framework term three years). Interest rate based on three-month CHF LIBOR. Interest rate adjusted every three months.
2 Fix mortgages. Fixed term and interest rate for the entire term.